The Web drives a shopping shift

E-commerce, now a $15 billion business, is shaping what people buy forholidays and how much they spend.

The Internet is looming over holiday commerce. Will Mall America survive?

As the Christmas shopping season unofficially starts today, the US may be on the cusp of a new consumer culture.

Online shopping, just a few years ago the novelty of a few computer techies, is now a $15 billion a year business. It is growing so fast that it is changing everything from how much people spend at the holidays to when they do their shopping.

Moreover, as malls themselves feel the creeping presence of the Internet, they are starting to change in conspicuous ways - in some cases fighting the e-commerce "revolution" and in others joining it.

Make no mistake: For many the hype about e-commerce sometimes seems as over-inflated as a dot-com stock. Yet for the first time, a significant number of people are purchasing their gifts with just the stirring of a mouse. Consumers clicked their way to $3.1 billion of online sales during last year's holiday season, according to Jupiter Communications, an Internet research firm in New York. Most industry analysts expect this figure to at least double this year, and some even predict it will reach $12 billion.

In fact, the sharp rise in online purchases this year is a trend most everyone expects will continue. So the question is: Are the days of crowded parking lots, unwieldy bags packed with gifts, and long lines to sit in Santa's lap coming to an end?

"I suspect there's a large number of folks that will use the Web versus going out and doing the Friday rush," says Natt Fry, a retail consultant with IBM.

Not so fast. Even with its exponential growth, e-commerce transactions will still account for just a sliver of the dollars people shell out this year for gifts. According to the Washington-based National Retail Federation, this holiday season should bring in about $184 billion.

Even so, the full impact of the Web may not simply be its growing share of total sales, but how it's affecting consumer and seller behavior, both online and off. Consider this: Before the advent of the Web, there was a trend in which Christmas shoppers would procrastinate and wait to the last minute to buy their gifts.

The Friday after Thanksgiving steadily lost its reputation as the busiest shopping day of the year, and Christmas Eve soon became one of the biggest days of holiday bustle. And as people waited to the last minute, they tended to spend less.

Yet, "from a cultural standpoint, the Web seems to be driving people to shop earlier," says Mr. Fry. The result: People are spending more, at least for now.

"When people started offering new types of selling - Amazon's personalization features, for example - we did see an initial spike in people spending their dollars on what they might not otherwise," says Fry. But he cautions that this may not be a long-term trend.

If the Internet is making people procrastinate less, it is also making it much easier to comparison shop, whether or not they decide to key in a credit card number and purchase online. As many retailers have noticed, the Web can be an ally, driving people to their stores.

"Online information about price is giving the consumer a lot more power," says Monica Perry, a professor of marketing at the University of North Carolina at Charlotte. "And many people find a product online, but then go out and buy it."

Though consumers are wary of using their credit cards over the Internet, this is sure to wane as they become more comfortable with the medium.

But there are other reasons that rumors of the death of mall culture are greatly exaggerated. Most shoppers still want to see and touch what they buy.

"We're still by and large a society of tire kickers," says Malachy Kavanagh, spokesman for the International Council of Shopping Centers (ICSC) in New York. "You've got to look at everything, walk around, try it on, pull at it, before you commit to buy it."

Not all malls see the Internet as an ally, however. One in St. Louis prohibited its tenants from advertising or promoting online sales in their stores. And other malls across the country are resorting to more and more promotional gimmicks - even at times imitating those online - to keep shoppers from staying at home and surfing the Net.

But the biggest impact of the Internet on consumer culture may be the growing trend to combine entertainment with any and every social experience. Emulating the "infotainment" on the Web, developers are expanding the kinds of entertainment venues they plan for their shopping centers. These include IMAX theaters, more "sit-down" restaurants, and even paid performers.

"With cross-shopping patterns that include the latest in entertainment, the latest new cinema, this will build some cross synergy between them," says Mr. Kavanagh. "So we're not expecting to see anyone cutting back in the number of stores they're building."

In fact, the ICSC is suggesting that retailers embrace the Internet and develop what they call "multi-channel retailing." Web sites, catalogue divisions, as well as their traditional stores should all work together in selling a product. Kavanagh points out that companies that have been strictly online sellers in the past - such as the computer makers Gateway and Dell - are now opening stores with showrooms.

For his part, Fry believes the malls will be an anachronism soon. Store shopping will be the last resort for most shoppers, and the malls will eventually lose out.

"Having had a few children, standing in line for four hours to have a kid sit on Santa Claus's lap, was really not that exciting of an experience," he says.

Forecast for online consumer spending

1998* 1999 2000 2001 2002 2003

Hardware & software $3.1 $5.4 $7.4 $9.5 $12.2 $15.8

Travel 2.2 4.2 6.3 9.0 12.8 16.6

Media 0.8 1.7 2.7 4.1 6.0 8.6

Apparel & footware 0.5 0.9 1.6 2.8 4.7 7.8 Consumer electronics 0.2 0.4 0.6 1.0 1.4 2.1 Groceries 0.1 0.2 0.8 2.0 4.6 7.5

Home 0.1 0.1 0.3 0.7 1.6 3.6

Toys & sporting goods 0.1 0.4 0.7 1.1 1.7 2.7

Ticketing 0.1 0.3 0.5 0.9 1.6 2.7

Health & personal care 0.0 0.1 0.3 0.7 1.5 2.9

Office supplies 0.0 0.1 0.2 0.3 0.6 1.2

Other 0.3 0.7 1.1 1.8 3.0 4.7

TOTAL 7.8 14.9 23.1 34.6 53.0 78.0

*Actual spending

Source: Jupiter Communications


In the story about China's unmanned spacecraft (Nov. 23, page 8), the photo should have said the craft landed in the central part of Inner Mongolia, which is in China.

In a profile of presidential candidate Gary Bauer (Nov. 23, page 3), the year of Ronald Reagan's election as president was incorrect. He was elected in 1980.

(c) Copyright 1999. The Christian Science Publishing Society

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